Saturday, December 25, 2010

Arundhati Roy was also threatened to be tried for sedition on her remarks on Kashmir earlier this year.

The Free Binayak Sen group on Facebook has sent the following text:

Mohandas K. Gandhi On His Conviction for Sedition:I owe it perhaps to the Indian public and to the public in England to placate which this prosecution is mainly taken up that I should explain why from a stanch loyalist and cooperator I have become an uncompromising disaffectionist and non-cooperator. To the court too I should say why I plead guilty to the charge of promoting disaffection toward the government established by law in India.

My public life began in 1893 in South Africa in troubled weather. My first contact with British authority in that country was not of a happy character. I discovered that as a man and as an Indian I had no rights. More correctly, I discovered that I had no rights as a man because I was an Indian.

But I was not baffled. I thought that this treatment of Indians was an excrescence upon a system that was intrinsically and mainly good. I gave the government my voluntary and hearty cooperation, criticizing it freely where I felt it was faulty but never wishing its destruction.

I came reluctantly to the conclusion that the British connection had made India more helpless than she ever was before, politically and economically. A disarmed India has no power of resistance against any aggressor if she wanted to engage in an armed conflict with him. So much is this the case that some of our best men consider that India must take generations before she can achieve the Dominion status. She has become so poor that she has little power of resisting famines. Before the British advent, India spun and wove in her millions of cottages just the supplement she needed for adding to her meager agricultural resources. This cottage industry, so vital for India’s existence, has been ruined by incredibly heartless and inhuman processes as described by English witnesses. Little do town dwellers know how the semi-starved masses of India are slowly sinking to lifelessness. Little do they know that their miserable comfort represents the brokerage they get for the work they do for the foreign exploiter, that the profits and the brokerage get sucked from the masses. Little do they realize that the government established by law in British India is carried on for the exploitation of the masses. No sophistry, no jugglery in figures can explain away the evidence that the skeletons in many villages present to the naked eye. I have no doubt whatsoever that both England and the town dwellers of India will have to answer, if there is a God above, for this crime against humanity, which is perhaps unequaled in history. The law itself in this country has been used to serve the foreign exploiter. My unbiased examination of the Punjab Martial Law cases has led me to believe that ninety-five per cent of the convictions were wholly bad. My experience of political cases in India leads me to the conclusion that in nine out of every ten the condemned men were totally innocent. Their crime consisted in the love of their country. In ninety-nine cases out of a hundred justice has been denied to Indians as against Europeans in the courts of India.This is not an exaggerated picture. It is the experience of almost every Indian who has had anything to do with such cases. In my opinion the administration of the law is thus prostituted consciously or unconsciously for the benefit of the exploiter.

The greatest misfortune is that Englishmen and their Indian associates in the administration of the country do not know that they are engaged in the crime I have attempted to describe. I am satisfied that many Englishmen and Indian officials honestly believe that they are administering one of the best systems devised in the world and that India is making steady though slow progress. They do not know that a subtle but effective system of terrorism and an organized display of force on the one hand, and the deprivation of all powers of retaliation or self-defense on the other, have emasculated the people and induced in them the habit of simulation. This awful habit has added to the ignorance and the self-deception of the administrators. Section 124-A, under which I am happily charged, is perhaps the prince among the political sections of the Indian Penal Code designed to suppress the liberty of the citizens. Affection cannot be manufactured or regulated by law. If one has an affection(sic) for a person or system, one should be free to give the fullest expression to his disaffection, so long as he does not contemplate, promote or incite to violence. But the section under which Mr.Banker [a colleague in non-violence] and I are charged is one under which mere promotion of disaffection is a crime. I have studied some of the cases tried under it, and I know that some of the most loved of India’s patriots have been convicted under it. I consider it a privilege, therefore, to be charged under that section. I have endeavored to give in their briefest outline the reasons for my disaffection. I have no personal ill will against any single administrator, much less can I have any disaffection toward the King’s person. But I hold it to be a virtue to be disaffected toward a government which in its totality has done more harm to India than any previous system. India is less manly under the British rule than she ever was before. Holding such a belief, I consider it to be a sin to have affection for the system. And it has been a precious privilege for me to be able to write what I have in the various articles tendered in evidence against me.

In fact, I believe that I have tendered a service to India and England by showing in non-cooperation the way out of the unnatural state in which both are living. In my humble opinion, non-cooperation with evil is as much a duty as is cooperation with good. But in the past, non-cooperation has been deliberately expressed in violence to the evildoer. I am endeavoring to show to my countrymen that violent non-cooperation only multiplies evil and that as evil can only be sustained by violence, withdrawal of support for evil requires complete abstention from violence. Non-violence implies voluntary submission to the penalty of non-cooperation with evil. I am here, therefore, to invite and submit cheerfully to the highest penalty that can be inflicted upon me for what in law is a deliberate crime and what appears to me to be the highest duty of a citizen. The only course open to you, the judge, is either to resign your post, and thus dissociate yourself from evil if you feel that the law you are called upon to administer is an evil and that in reality I am innocent, or to inflict upon me the severest penalty if you believe that the system and the law you are assisting to administer are good for the people of this country and that my activity is therefore injurious to the public weal.

Thursday, December 9, 2010

Liu Xiaobo, a poet and literary critic, is the recipient of the 2010 Nobel Peace Prize. China has forbidden him to travel to the award ceremony, which will be held on Friday in Oslo. This poem was translated by Jeffrey Yang from the Chinese.

By LIU XIAOBOPublished: December 8, 2010New York Times

from “Experiencing Death”

I had imagined being there beneath sunlightwith the procession of martyrsusing just the one thin boneto uphold a true convictionAnd yet, the heavenly voidwill not plate the sacrificed in goldA pack of wolves well-fed full of corpsescelebrate in the warm noon airaflood with joy

Faraway placeI’ve exiled my life tothis place without sunto flee the era of Christ’s birthI cannot face the blinding vision on the crossFrom a wisp of smoke to a little heap of ashI’ve drained the drink of the martyrs, sense spring’sabout to break into the brocade-brilliance of myriad flowers

A blink, a trembling instant passesto a flash of awareness: I’m still aliveOn Central Television Newsmy name’s changed to “arrested black hand”though those nameless white bones of the deadstill stand in the forgettingI lift up high up the self-invented lietell everyone how I’ve experienced deathso that “black hand” becomes a hero’s medal of honor

Even if I knowdeath’s a mysterious unknownbeing alive, there’s no way to experience deathand once deadcannot experience death againyet I’m stillhovering within deatha hovering in drowningCountless nights behind iron-barred windowsand the graves beneath starlighthave exposed my nightmares

Monday, December 6, 2010

Far away from the heat and dust of Bhopal, two federal class action lawsuits are under way here in New York City.

The Bhopal cases filed in the U.S. have had a circuitous history, not unlike in India.

The cases, Sahu Vs. Union Carbide et al, are civil cases filed in the United States District Court for the Southern District of New York. Plaintiffs are seeking remediation to address personal injury and damage to property. They are also fighting for medical monitoring. They claim that UCIL’s Bhopal plant produced hazardous wastes during its normal operations that contaminated the soil and drinking water of local communities. These cases are different from the claims arising soon after the 1984 disaster. Those initial claims were thrown out on grounds of forum non conveniens – a doctrine where the district court refused to take jurisdiction over the matter citing a more appropriate forum available to the parties.

In their complaint filed in 2004, plaintiffs Janki Bai Sahu et al, have said that UCC and its former CEO, Warren Anderson, should be held liable for their injuries on the grounds that they were “direct participants and joint tortfeasors in the activities that resulted in the pollution, that UCC worked in concert with UCIL to cause, exacerbate, or conceal the pollution and that UCIL acted as UCC’s alter ego, justifying piercing the corporate veil”.

Richard L Herz, Earth Rights International, co-counsel in the Sahu case, said, “The aim is to establish that UCC and Warren Anderson are liable for the pollution that has contaminated the plaintiffs' drinking water and that of thousands of their neighbors.”

At present, UCC maintains that the company cannot be held liable for the actions of the Indian subsidiary. “By requirement of the Government of India, the Bhopal plant was detail designed, owned, operated and managed on a day-to-day basis by Union Carbide India Limited (UCIL) and its employees,” Tomm F. Sprick, Director, Union Carbide Information Center said in an email. The company has chosen to “recharacterize 20 years of its association with UCIL, as a period of minimum involvement,” H. Rajan Sharma and lead counsel in the Sahu litigation said.

Plaintiff lawyer, Mr Herz cited company documents dating back to 1973 demonstrating UCC’s involvement with the Indian subsidiary. “UCC was intimately involved in all aspects of the Indian operation that caused the pollution that continues to contaminate drinking water in Bhopal. It transferred technology that was inadequate, approved plans for design of the plant and participated in the creation of the toxic landfill that ultimately failed,” he said.

The journey of these cases through U.S. legal system has gone on for the better part of this decade, but it is imperative for the Indian government to act immediately. On June 24th 2008, the Indian government communicated to the district court that they would cooperate with any clean up by the UCC. “But that has not proven to be sufficient,” Mr Sharma said.

In the past, the District Court which is the lower court, was of the opinion that a US court may have trouble issuing a binding enforcement for an environmental clean up in another country, because the court believed this could interfere with the sovereignty. “Although the Plaintiffs do not believe that such concern is warranted, for this reason, the Union of India’s participation has been sought in the action,” Matthew K. Handley, Attorney, Cohen Milstein Sellers & Toll PLLC said.

In light of the recent judgment in India, the government must take concrete steps to address the issue. There are fundamental reasons for doing so. “For example, the government should intervene in the New York litigation based on the fact that it owns the land on which the Bhopal plant is located and which is now badly polluted,” Mr Sharma added.

Notwithstanding yet another attempt by the reconstituted Group of Ministers (GoM) on Bhopal, the Government of India should now be a “party” to the cases currently in litigation in the U.S. to push for faster resolution. Not holding UCC liable would mean that the Indian government will have to pay up to clean the site. And that essentially means the Indian taxpayer. Further, it would amount to giving a public subsidy to a company that allegedly perpetrated one of the worst industrial disasters in the world.

Further, UCC, now a wholly owned subsidiary of The Dow Chemical Company, may be held liable under a principle known as piercing the corporate veil. In the past, the district court has said that there was no evidence that UCC was directly responsible for the actions occurring in Bhopal. Usually a corporation is solely responsible for its liabilities. But under exceptional circumstances, the corporation may be held responsible for the liabilities of its shareholders and directors and in this case a subsidiary, thus piercing the corporate veil.

So how critical is it to pierce the corporate veil in this case? “While piercing UCIL’s corporate veil is one of our claims, it is only an alternate approach. We believe that UCC was directly involved in the operations of UCIL and had oversight over implementation, cleanup and training at UCIL. Even if this were not the case, however, UCC’s domination of UCIL should give rise to a piercing of the corporate veil claim and will make UCC liable for its Indian operations,” Handley said.

Besides, unlike before, ‘forum non conveniens’ can no longer be an escape route. Actions of the company are under the jurisdiction of the District Court since UCC was incorporated in the state of New York. Also, UCC has been criminally indicted in India and will never suggest that the case be moved to India. United States District judge J.F. Keenan presided over the case in the 1980s when the case was sent to India on the grounds of forum non conveniens. He said that the court was convinced that the Indian legal system was in a far better position than the American courts to determine the cause of the tragic event and thereby fix liability. He continues to preside over the on-going cases at the District Court now. This district court is an influential one, under its jurisdiction are the major financial centers of New York. Usually, a publicly traded company whose shares are traded on NYSE falls under the jurisdiction of this district court.

When asked to comment on the cases that are in progress, Sprick of UCC said, “Neither Union Carbide nor it attorneys will discuss matters currently in litigation. This was in response to an email query sent to defendant lawyer William A Krohley, partner at Kelley Drye & Warren LLP.

At present, plaintiff lawyers have been allowed limited discovery but have not been allowed to conduct depositions or interrogations. Reaching the jury trial stage in the case is at least two years away at the earliest. This is assuming plaintiffs are successful. (See time-line). If the verdict of the jury trial at the District Court is in favor of the plaintiffs, UCC can choose to appeal against the verdict at the appellate court. But UCC will then have one final opportunity.

Appeals from the Southern District of New York are taken to the United States Court of Appeals for the Second Circuit, an appellate court. The United States Court of Appeals for the Second Circuit is one of the thirteen United States Courts of Appeals. It appears the appellate court has, in the past, largely agreed with the stance of the plaintiffs and believes they have a valid claim. The final word will be of the appellate court. Amen.

Saturday, December 4, 2010

In a major setback for people queuing up at American courts to seek justice, denied in their own home countries, one American court ruled that businesses may not be held liable for their actions overseas.

The article is optimistic, that if not America, another country will take up the "baton" as it were.

Predictably businesses will be relieved. In fact Dow Chemicals used this measure to throw out the Bhopal claims in the past. But plaintiffs in the Bhopal case, are now using another approach. More on that, soon. (Clearly it is more complicated because Dow is incorporated in the U.S. and the problem has political-diplomatic dimensions.)

You would have already read this near-scathing take on Twitter by Malcolm Gladwell in The New Yorker on how the Revolution will not be tweeted. I agree to many of the points he makes on the exaggerated successes of twitter, but it comes off as a very old media argument. I mean, wake up and smell the technology.

The Indian media is in the midst of a super denial: caught on tape some journalists are "heard" "prostrating" to accommodate powerful corporate interests. Predictably, this was blacked out in the mainstream media - one cannot distinguish one newspaper from another - many media groups have blood on their hands. But few nondescript twitter-ers, many possibly not from the media at all, have kept the issue burning and alive.

This is, but just one example. Give it time. Microblogging will not change the world, but it may do so incrementally.

Disclosure: I am a self-confessed compulsive twitter-er, so I may not be completely objective about this.

Excerpts:"New technologies of communication and distribution of information have already changed the space in which we, as writers, live and work. The transnational networks are now the place in which we make our writing, where we research, where our work is archived and where we reach our readers. They are not, it goes without saying, a natural space, but one whose protocols and conventions are set – by engineers, by administrators, and by the companies who own the infrastructure and make the equipment we use to access it. It’s already the case that without access to the internet, people are denied participation in much of world culture. I think the production of this new space is too important to be left to engineers, administrators and corporate executives. We, as writers ought to help set the terms. Of those three groups, our natural allies are the engineers. We should be talking to them. What kind of information space do we, as writers, want to occupy? Where do we want to live and work? What values should be embedded in that space, what protections, what sanctions?

Issues such as net neutrality (the equality of all information traffic), censorship, data collection, personal privacy, and the lack of a persistent archive are of great importance to us. But there are two major tendencies emerging, both of which are having a profound impact."

Monday, September 13, 2010

Is development a dirty word? Solution by the judiciary for a governance problem.

Here is a short piece I had written for one of my formal employers, a few years ago:

It is almost natural that policy-making in India is more often than not fraught with complications and contradictions. Why is the Argumentative Indian struggling to articulate, killing himself on expression rather than execution? To attribute this lack of coherence and clarity in policy-making to the sheer diversity in the country is in part explicable.

A scheming minority having vested interests, who claim to be articulating the concerns of a larger majority, is particularly stark in a developing country where nearly half the population is not even aware of their rights, let alone voicing them.

In a society as large as this, to organise a dialogue to arrive a decision based on consensus with the participation of all stakeholders concerned is clearly impossible. To get a rational dialogue flowing, driven by seemingly different and contradictory concerns is a dilemma that is perplexing.

In a milieu like India's where different stakeholders have access to policy-making, there is a tangible benefit of diversity of perspectives the stakeholders carry with them. But just too much time is spent on arriving at a minimum common ground which is necessary as a starting point for participatory policy making.

Further, when complex and controversial issues get engaged through a participatory approach involving stakeholders drawn from widely different backgrounds the process is even more difficult. But given the framework of the law and existing governance systems, little is done as opposed to what can really be done.

In India more so, adding to the confusion are stakeholders in policy-making who may refashion their interests and position them differently for short term gains contrary to the larger common good. In this politics of exclusion, arguments are apriori tuned out.

Formations of cliques in a diverse society is based on differing perceptions of 'value'. To arrive at the lowest common denominator or a representative value for a large group is still possible, despite various differences in cultural sensibilities and sensitivities. But just how much representation is required? And who regulates this representation?

The broader objective of achieving social equity is distant from where policy-makers actually sit and crystallize decisions affecting millions of people. Seldom can the costs of a democracy that a generation has to pay, is offset by the larger social equity met.

While there is no way to quantify the costs of a democracy, there is no shying away from the fact that the pace of growth is reduced while servicing the larger idea of equity. So what is the inflection point, where one has the authority to outweigh moving forward despite limited representation as against maintaining status quo and still not bringing stakeholders into the fold? No easy answers there.

Monday, September 6, 2010

People like Amit are modern day martyrs, giving up their lives defending the right to know - denied by our very own countrymen. But RTI is a revolution that has been uncapped - never to be contained again.

Stumbled on this nice clip from NPR Music on the eve of Labor Day in the U.S. Mostly music for workers in South America by artists from the region - but relevant world over. Trapped Chilean mine workers - this is for you.

Read a piece from the Guardian on the Chilean government questioning mine owners about the incident.

A rare light that shone over the opaque and difficult challenges for democracy that Burma faces.

Here is another link for Burma VJ on youtube - a film that Kalaynee co-produced. Any journalist who has held a camera and shot covertly can feel for the video reporter. The despondency and existential angst of this Burmese reporter, is a question that many of his tribe face the world over. Does it matter?

Read a Reuter's report here on a Venezuelan hunger-striker who protested Hugo Chavez's land nationalization policies. This was compared to Orlando Zapata - a Cuban protestor who died earlier in the year.

Here is a New York Times story on banks reviewing lending standards for companies involved in environmentally unfriendly activities.

But it may not affect companies in question, because I surmise, they are big enough to access capital on their own. Unless, capital really becomes constrained enough to stop financing of such projects.

An excerpt from the story - that highlights organizations working in this area: "The Rainforest Action Network, which has headed a campaign to highlight financial institutions with connections to the mining, said this month that the policy shifts were chipping away at the financing."

Monday, August 30, 2010

Check out a WSJ blog post on a leaked email between US and Indian authorities. In the email, U.S. Deputy National Security Advisor Michael Froman, tries to negotiate terms of Dow Chemicals by suggesting a chilling effect on investment relationship between the two countries.

Also read a good edit by Seema Chisti is in the same publication. Another Avatar - a commentary on what the Congress hopes to get having Rahul Gandhi as a soldier for the tribals in New Delhi. The problem of singling out a specific mining project as opposed to having holistic policies for tribals and illegal mining.

The British Safety Council has withdrawn a safety award, based on an accident in Korba that killed 41 construction workers. Vedanta's subsidiary Sterlite industries holds a majority stake in Bharat Aluminium Company (BALCO).

Wednesday, August 25, 2010

Check out this FT story here: Pretoria defends China’s Africa policy. Excerpts:"China has many supporters in Africa, particularly among ruling elites who often benefit personally from its allocation aid and investment without attaching conditions.

But Beijing also has many African critics, and Chinese companies and workers have been targets of animosity and violence in places such as Algeria, Angola, Democratic Republic of Congo and Zambia, where they have a growing presence."

The story also cited South African data - the country's $6.57bn in exports to China last year were mostly natural resources while its $9.45bn of imports from China were value-added manufactured goods.

Tuesday, August 3, 2010

Jesus! Mahindra & Mahindra re-elects Keshub Mahindra - former non-executive chairman of Union Carbide’s Indian subsidiary. He was the most senior executive to be convicted of negligence in a court ruling over the Bhopal disaster.

Here is a quote of from the FT story:Salman Khurshid, the minister of corporate affairs, has been drawing up new legislation to update the 1956 Companies Act to strengthen the role of non-executive directors in companies...Mr Khurshid has described Mr Mahindra’s decision to remain chairman as reflecting a well-considered “legal consultative process” and has warned against any hasty government intervention.

Thursday, July 22, 2010

A slightly dated story on mining in Orissa and the larger issue of land acquisition in the country. A good story with lots of figures - one that keeps the big picture in mind. Businessweek - What's holding India Back.

Resource nationalism, economic sovereignity, role of a welfare state - highly complicated issues with no simple answers.

I love telling this story. When I began as a journalist six years ago, I was never allowed to cover pharma at this business newspaper in Delhi, because my editor thought I was biased against Monsanto. During the interview, I told him how business newspapers should write about Monsanto's experiments with GM crops in India.

Well, here is a story that as far as I know - draws attention for the first time - a link between child labor in Rajasthan and the Bt-cotton boom. I am not so sure about sourcing in this Hindustan Times story - but nevertheless it is a first.

This article in The Economist calls a minimum wage battle in Hong Kong - The end of an experiment - departure from the "swash-buckling, free-market ways" of HK. Figures in the story allege that unemployment will go up with an increase in minimum wage. It goes on to say that because Hong Kong is getting more regulated, it may become less prosperous! Sounds familiar?!

Here is in some ways, a similar prescription from the editorial pages of the Financial Express. Minimum wages is not the answer - skills development is. Fair enough. Excerpts from this argument in FE:A 100-day job under NREG violates more than 37 labour laws: minimum wages, contract labour, ESI, EPFO, etc. So the government—unlike Left parties and trade unions—seems to recognise that the good is not the enemy of the great and a job is better than no job. But any state intervention programme in labour markets that ignores the issue of labour law reform ignores the very real costs of our current regime; unorganised employment, capital substitution and corruption. The labour law issue is important to the poverty and skill issue because it is very difficult—if not impossible—to sustain third party financing of skill development unless it leads to organised employment.

A Newsweek story on ethical sourcing links potential supply chain issues of tech companies to war ravaged mines of Africa - Congo in particular. There is talk about certified trading chains for international companies. I guess when such deals become a part of trading agreements between countries, some of these issues can be addressed.

Part of a quote from the story:David Sullivan, policy manager for Enough Project, “We [have] yet to see a smoking gun from a conflict mine to a major electronics brand, but the companies are fairly upfront about the fact there’s no mechanism in place to ensure these minerals are not seeping into their supply chains.”

Thursday, July 15, 2010

Any one who has visted the Tehri site will be astounded at the scale of operations -after all India's largest hydropower project. For years people have been protesting about the ecological disaster that this has created / can inflict, in addition to the arbitrary displacement of local communities that happens ever so often in India today.

It turns out that the World Bank (!) is now concerned about all the environmental implication the projects has had / can have, before it approves a $600 million loan. Here is a story by Mint - Tehri hydel project under scrutiny.

"Jameela Akhtar, a Kashmiri housewife, sent her teenage son, Ishtiyaq, to a bakery in their middle-class Anantnag neighbourhood to buy bread. It proved to be a fatal errand. A kilometre away, teenagers were hurling stones at police on the national highway, part of an upsurge of violent clashes pitting frustrated local youth against the might of Indian security forces across Kashmir.

It is unclear whether Ishtiyaq, 15, joined the agitation or was simply caught in the chaos. But police – chasing protesters through the narrow, twisting alleys of the residential colony – pursued him home, then shot him in his courtyard, where he died in front of his family. A friend and a bakery employee were also shot and killed on the spot.

...The story goes on with a quote: His older cousin, Asif Khandey, an engineer, asks: “How is it possible that they would have shot three people at point blank range? Is this justice? Is this India? Is this democracy?”

A federal appeals judge in New York heard arguments this week on an important First Amendment case. Documentary filmmaker Joe Berlinger is fighting Big Oil Chevron – for his film called Crude. The company has demanded 600 hours of the fimmaker’s footage.

A potential resource crunch? The Indian government is doing some serious thinking about giving away raw materials for steel mills in China and elsewhere. Interesting. Hope the establishment will also spare a thought or two for the people who are routinely displaced from mines.

Here is the FT story: India seeks ban on iron exports, by James Lamont in New Delhi. July 13, 2010.

Also, check out this link for the organization that has been fighting for the rights of people on mineral resoruces. Mines, Minerals and People.

This set me thinking when I was in school last year. Based on Dan Ariely's book Predictably Irrational, we were asked to design an experiment that would bring out signs of irrational behaviour in consumers.

Here is what I found:

Two friends of mine, who hold diametrically opposing views on the resolution of the Israel-Palestine conflict, set me thinking when I designed this experiment. While both my friends are Indians, one is of Jewish origin and the other is Muslim. (My Muslim friend claims that he has nuanced opinion about Israel.) Both of them are not exactly comfortable with each other. I think this was strange because here are two Indians who disagreed strongly with each other about the resolution of a conflict thousands of miles away, but one, both felt passionately about. My Muslim friend does have a dislike to a few things from Israel and my Jewish friend is highly intolerant of anything from the Arab world. My belief is that the world is more liberal than it appears, notwithstanding reconstructed wars over civilizations. In an age of free trade or economic imperialism as some would say, I wanted to know if politically conscious consumers, would base their purchasing decisions on where and how a product is made.

My experiment examined whether ethnicity could impact decision making. I spoke to 25 people, from 15 countries and various ethnic groups. Many of them were students at New York University and almost everyone was widely traveled. Although studies have shown that it has been difficult to establish a correlation between ethnicity and economics, partly because people want to sound politically correct and more because, the world has indeed become more accommodating of various ethnic groups; I wanted to explore this area.

I just had three basic questions for my respondents. The first one was if they would be willing to pick up a conversation amongst people from diverse ethnic backgrounds that they were unfamiliar with. This was just to test how open and comfortable they were in a new environment and whether they were guided by stereotypes that may be deep-rooted or sub-conscious. Nearly 40% of the respondents said that they would be hesitant and cautious while trusting and talking to people whose ethnicity they were unfamiliar with. One interesting response was from a South Asian who said he would be generally distrustful of the western world (North America and Europe) and more comfortable everywhere else!

The next question was whether they would buy products from any country without exception. While most were curious about trying out new products from various countries, some would be cautious. There were two parts to this question – whether they were neutral to buying products from anywhere in the world and second whether they cared very much about potential violations that the production entailed. Exactly half of the respondents would be driven by the rational decision of judging the product on the quality alone and not its label. The other half, said they would be cautious or had preference for goods from Italy or China. It also emerged in this experiment that the Swiss and the Italians may boycott Mozzarella cheese, if they knew it was made in India. Not surprising because, 70% of the world's buffalo population lives in India (on the roads mostly). Many would walk into a seemingly international store, looking to pick up a label from Europe when in fact they would be surprised to see the 'Made in Madagascar/Bangladesh' label. Would they drop it then? Some said they would.

The second part of the question was whether as a customer they would be bothered about the grounds on which a product was made? If the production meant brazen exploitation of labor common in some countries or regions were specific minorities were underpaid, economic processes that used child labor, would it have affected their decision? This time, 40% of the respondents were driven by the quality of the product and nothing else. The rest 50% said it would affect their decision while buying the product even if it was a trusted brand and priced attractively. Less than 10% of the respondents said they should base their decision on such factors but had not yet thought about it deeply. One respondent said that unless she worked under such exploitative conditions she would not know whether she would stop buying such products. One Japanese respondent said that she has stopped dreaming about buying diamonds after watching Blood Diamond. Another customer – a vegetarian said that while buying cosmetics she would be vary of its contents that may violate her religious affiliation.

My third question was if ethnicity had any impact on economic status. Only 12% of the respondents felt that ethnicity has no impact on economic status. The rest were of the view that belonging to a certain ethnic group could work both ways. Majority felt that in reality, although it is only hard work that determines success but glass ceilings existed in most countries.

The inferences I draw from this experiment is that, typically a ‘rational’ consumer weighs his choices based on quality and price, but he could make his decisions based on emotional factors otherwise considered irrational. He could be concerned about the mode of production or origin of production; even as his needs a consumer was being met. I think, going forward, as people begin to travel a lot more and become aware of the schisms dividing the world, this will undoubtedly have an impact on businesses. My hunch is companies can no longer view their markets across the world as silos that have nothing to do with each other. They will have to keep in mind consumer preferences for the group as a whole – their actions in one part of the world may impact businesses in another.

Tuesday, July 6, 2010

Value investor Whitney Tilson is long BP, and answered my ethics question in a Q&A sent to his investors:

Q: Regardless of how cheap BP’s stock is, is it immoral to try to profit from owning it, in light of the company’s bad behavior?

A: As noted earlier, BP appears to have an atrocious safety record. In owning the stock, we are not endorsing its behavior, either before or after the Deepwater Horizon accident. But as value investors, we sometimes have to hold our noses when we invest because the cheapest stocks are often the ones of companies that have behaved badly or are otherwise tainted. Example include McDonald’s, which many believe bears responsibility for the obesity epidemic in this country (see Fast Food Nation and Super Size Me), and Goldman Sachs, which many blame for the global financial crisis (see The Great American Bubble Machine).

That said, we would have a problem owning stock in a company if we believed that its core business harmed people – most subprime lenders at the peak of the housing bubble, certain multi-level marketing firms and tobacco companies come to mind. BP certainly doesn’t fall into this category.

As for BP’s safety record, we don’t defend it, but we don’t think BP is deliberately blowing up its own rigs and refineries and killing its employees. If an email emerged that the CEO or board of BP were warned that the Deepwater Horizon rig was likely to explode and failed to act, we would certainly rethink the morality of holding the stock.

I don’t find this answer compelling at all. First is the language in which Tilson talks about his comparables, McDonald’s and Goldman Sachs. He writes about what “many believe” and what “many blame”, and cites the most shrill and stringent critics in both cases. Being a contrarian value investor is all about making your own mind up, and what’s germane here is what (and whether) the investor thinks about the ethics of the investment, rather than what someone like Morgan Spurlock or Matt Taibbi thinks.

Tilson then says there are companies he’d have a problem investing in, if they make harmful products. That seems to imply that it’s worth taking a serious look at the ethics of owning stock in BP. But his conclusion is trite, setting up a straw man of BP deliberately killing its employees, and saying that he’d only have a serious ethical problem with BP if it knew the explosion was likely.

Note the definite article here: Tilson is saying that he’d only have qualms if BP knew this particular explosion was likely. But the ethical case against BP is that it acted with reckless indifference towards safety standards in general, that it cut corners knowing that doing so increased the likelihood of disaster, and that it should have known that an explosion was likely, at some point, and that the chances of this explosion happening at a BP rig were significantly higher than the equivalent probability at other big oil companies.

This has important implications for the stock, of course. BP has thousands of oil rigs; the chances of one of them exploding are not much smaller today than they were a few months ago. The clean-up and other costs associated with the Deepwater Horizon are one thing, but how much will BP be forced to spend on upgrading the safety systems at all of its other rigs, now? We’ve learned our lesson, and surely all want to ensure that this kind of thing doesn’t happen again. But we’ve barely started to think about what that kind of root-and-branch revamp of BP’s physical and managerial safety systems might cost, both in terms of cash and in terms of opportunity cost. I’d be interested in what Paul O’Neill thinks — before he was Treasury secretary, he did amazing things for Alcoa’s safety record. If Tony Hayward’s successor wants to do something similar, it won’t be easy, and it won’t be cheap.

p.s. Salmon is a blogger I totally admire(I flout rules of blogging here, but make an exception of reproducing his entire post here. Forgive me.)

Sunday, July 4, 2010

MAPLIGHT.ORG: BERKELEY, CA, July 2, 2010 - As oil continues to spill into the Gulf of Mexico legislators in both parties have been quick to respond with legislation. A number of bills have been introduced, some specifically targeting the crisis, and others with an eye toward preventing future problems. The main question to be addressed is how much BP and big oil (generally) will pay for the oil spill, now and in the future.

By examining campaign contributions MAPLight.org researchers revealed that of legislators sponsoring post spill oil bills the ones who have received the most money from big oil are championing bills that go lightest on the industry.

Republicans have drawn about 70% of big oil money this election cycle and while many Democrats rely on big oil as a major source of campaign funding, the ones sponsoring recent oil bills are not among them.

Which one of these bills, if any, will show how much influence big oil has over the 111th Congress?

A Closer Look at Oil Bills in Congress

In the House of Representatives, seven bills addressing the question of who is financially liable for the spill have been presented. The Democrats brought five, all from representatives who have received relatively little money from oil companies in the last election cycle, and two came from Republicans who have taken in significant oil money in the last two years.

Bill Cassidy, Republican from Louisiana, received $61,100 from oil companies over the last two years, the 38th highest recipient of funds of the House’s 435 members. He sponsored a bill, H. Res. 1374, that would devote all revenue from the oil excise tax toward the Deepwater spill cleanup. This bill would offer significant federal funds to help offset BP’s tab. Cassidy also co-sponsored a bill that would end the moratorium on offshore drilling.

The other Republican bill, H.R. 5356: Oil Spill Response and Assistance Act, is sponsored by Roy Blunt (R-MO), who places third among the GOP and fourth overall in oil money received with $165,850 (incidentally the top Republican recipient is Joe Barton, who apologized to BP for the Obama administration giving it a “shakedown”). Blunt's bill addresses the liability limit on oil spills imposed by the Oil Pollution Act of 1990, which caps an oil company’s liability for a spill at $75 million. Blunt’s bill would raise the limit to the higher of $150 million or the sum of the offending company's after-tax profits on its previous four reporting quarters. BP's net income from April 1, 2009 to March 31, 2010 was $20 billion.

New Jersey Democrat Rush Holt sponsored a companion bill, H.R. 5214: Big Oil Bailout Prevention Act of 2010, to one in the Senate, which would raise the liability limit to $10 billion plus the cost of cleanup. Far more than Blunt’s $150 million or 1 year of profits, but perhaps the most lenient of the Democrats’ bills.

To date, Holt's bill has attracted 82 co-sponsors (one Republican and 81 Democrats), a sign that it has a good chance of moving forward. Raul Grijalva’s (D-AZ) bill, H.R. 5355: To amend the Oil Pollution Act of 1990 to repeal the limitation of liability..., would remove the liability limit entirely. A resolution, H.Con.Res.280,brought forward by Mary Jo Kilroy (D-OH) expresses the sentiment that BP should reimburse the federal government for all costs associated with the spill. Steve Kagen’s (D-WI) bill, H.R. 5520: Oil Spill Responsibility Act of 2010, would require BP to pay reparations to people affected by the spill, and a bill, H.R. 5513: Spilled Oil Royalty Collection Act, by Chellie Pingree (D-ME) would place a 12.5% royalty on oil removed (or spilled) from the Outer Continental Shelf (which includes the Gulf of Mexico), and apply it retroactively before the spill. Of these five Democrats, Kagen received the most oil money, $6,400, 231st among House members, and less than 1% of his fundraising total for this cycle.

Of the bills introduced in the last two months none have moved to the floor for a vote. The answer to how much BP and big oil will ultimate pay for the oil spill will play out in the coming months and will be a test of big oil’s influence on Congress.

Methodology: Campaign contributions shown for the last two years of available data, May 6, 2008 - May 5, 2010, including contributions to presidential campaigns. Contributions data provided by the Center for Responsive Politics (OpenSecrets.org).

MAPLight.org research intern Owen Poindexter contributed to this story.

Editors note: If you are interested in receiving blog posts from MAPLight.org's research department via RSS feed click here.

About MAPLight.org:MAPLight.org is a nonpartisan, nonprofit, 501(c)(3) organization based in Berkeley, California. Its mission is to illuminate the connection between Money and Politics (MAP) using our groundbreaking database of campaign contributions and legislative votes. MAPLight.org combines data from the Federal Election Commission, the Center for Responsive Politics, GovTrack.us, the National Institute on Money in State Politics (NIMSP), the Los Angeles City Ethics Commission and other sources to better inform Americans and local and national media about the role of special-interest money in our political system. Hundreds of newspapers, TV stations, radio shows and online news sites have cited MAPLight.org's research, including CNN, the public radio show Marketplace, Harper's, The Washington Post, and Reuters.

MAPLight.org has received numerous awards including a Knight-Batten Award for Innovations in Journalism; a James Madison Freedom of Information Award from the Society of Professional Journalists, Northern California Chapter and a Webby nomination for best Politics website. To learn more, please visit: MAPLight.org.

About Me

I am a reporter from New Delhi working in Switzerland. A graduate from New York University's Business and Economic Reporting program, I now work as a freelance business journalist. Also pursuing a masters in development studies in Geneva.
http://pritipatnaik.org/